Article supplied by Welex, July 2016
At the end of 2012 modifications were made to the Spanish tax and financial regulations. Some of the changes were introduced to increase administrative actions in the prevention of and fight against fraud. One of these initiatives involved setting limits on cash payments for certain transactions. A cash limit was established on all transactions when one of the parties involved acts as an entrepreneur or professional and the amount being paid is equal to or above €2,500 or its equivalent exchange value for a foreign currency. Nevertheless, this limit can be increased to €15,000 or its equivalent exchange value for a foreign currency when the payer is an individual who can prove that their fiscal residency is not in Spain and they are not acting as an entrepreneur or professional.In order to calculate the amount involved in a transaction we are required to take into account the sum of all partial payments for the purchase of the goods or services rendered. Cash payments are considered to be all those included in Article 34.2 of the Act10/2010, dated 28 April, the law for prevention of money laundering and financing of terrorism. These include the following:
• Banknotes and coins, Spanish or foreign.
• Bank cheques made out to the bearer in any currency.
• Any other form of payment, including electronic means, that can be used as a payment to the bearer.
With regards to any payments that by law cannot be made in cash, all parties involved in the transaction should ensure they keep all the support documents for the payment during a period of five years from the day of the transaction, to be able to prove that the payment was made by other means other than cash. And, if requested by the tax authorities, they must present proof of the payment. Non-fulfilment of these cash limitations constitutes a tax infringement, and all parties can be considered offenders: the one paying with cash and the one receiving the cash payment. The tax agency can move against either of the parties, or against both of them. A breach of these limitations is considered serious. If one of the parties involved in a transaction that breaches the cash limits reports to the tax authorities within the following three months after the transaction, informing them about the cash amount and identifying the other party involved, they will have any responsibility removed and will not be liable to any penalty. The penalty is a monetary fine proportional to 25 per cent of the cash paid.